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The Limits of the G20's Debt Service Suspension Initiative

May 18, 2020

As of May 1, G20’s Debt Service Suspension Initiative (DSSI) for 76 International Development Association (IDA) countries and least developed countries (LDCs) has become operational. However, it remains unclear whether private-sector creditors will collaborate on such efforts for those countries and the question on what to do about the much larger debts of low- and middle-income countries is still open.

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How Asset Management Colloquia Complement Classroom Learning

By: Tim Gunning May 15, 2020
Tim Gunning

As a newly welcomed Class of 2021 EMBA student, I am grateful for being able to participate in the Asset Management colloquia series this past Fall, which included four impressive speakers from the Yale community. Our first speaker was Aleh Tsyvinski, Arthur M. Okun Professor of Economics.  He...

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News in Systemic Risk: Friday, May 15, 2020 (10 a.m. ET)

May 15, 2020

Covid-19 and regional employment in Europe (Sebastian Doerr, Leonardo Gambacorta; Bank of International Settlements)

Novel coronavirus (COVID-19) - economic and financial developments and the responses taken by the Bank of Japan (Haruhiko Kuroda; Bank of International Settlements)

The Commercial Paper Funding Facility (Nina Boyarchenko, Richard Crump, Anna Kovner; Federal Reserve Bank of New York)

The General Board of the European Systemic Risk Board takes first set of actions to address the coronavirus emergency at its extraordinary meeting on 6 May 2020 (European Systemic Risk Board)

Do non-performing loans matter for bank lending and the business cycle in euro area countries? (Ivan Huljak, Reiner Martin, Diego Moccero, Cosimo Pancaro; European Central Bank)

The interbank market puzzle (Franklin Allen, Giovanni Covi, Xian Gu, Oskar Kowalewski, Mattia Montagna; Bank of England)

Quality is our asset: the international transmission of liquidity regulation (Dennis Reinhardt, Stephen Reynolds, Rhiannon Sowerbutts, Carlos van Hombeeck; Bank of England)

How to fight an economic crisis in a monetary union (Phillip R. Lane; The Economist)

Continue reading “News in Systemic Risk: Friday, May 15, 2020 (10 a.m. ET)”

EU Expands Temporary Framework For State Aid to Allow Recapitalization

May 14, 2020

On May 8, the European Commission (EC) approved new measures under the Temporary Framework for State Aid, which allow Member States to purchase equity and subordinated debt from non financial companies. The EC will allow recapitalization measures through June 30, 2021, a time period six months longer than other measures under the Temporary Framework.

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EU Programs Supporting non-EU Countries

May 13, 2020

On April 22, the European Commission approved a €3 billion macro-financial assistance (MFA) program to ten neighboring countries outside the European Union for a period of one year to help them cover their immediate financing needs. Like the €20 billion Team Europe strategy announced earlier, this helps demonstrate the EU’s solidarity with other countries in tackling the COVID-19 pandemic.

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Startup Stories: Converting Snorkel Masks into Protective Gear for Healthcare Workers

May 13, 2020

Venture: MasksOn.org is a nonprofit initiative that generates low-cost, high-quality protective gear for healthcare workers at the front line of the COVID-19 pandemic. Specifically, the organization has built durable, reusable personal protective equipment (PPE) by adding adapters to full-face...

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The Philippines Provides Support to Workers in the Informal Economy

May 13, 2020

The Philippines government has included a temporary short-term work program that aims to employ close to 1 million workers in the informal sector in its COVID-19 response package.The TUPAD #BKBK program provides temporary employment opportunities to workers in the informal sector, as these workers are particularly vulnerable to economic hardship due to the COVID-19 pandemic.

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News in Systemic Risk: Wednesday, May 13, 2020 (10 a.m. ET)

May 13, 2020

Inflation Expectations in Times of COVID-19 (Olivier Armantier, Gizem Kosar, Rachel Pomerantz, Daphne Skandalis, Kyle Smith, Giorgio Topa, Wilbert van der Klaauw; Federal Reserve Bank of New York)

Macroprudential regulation and leakage to the shadow banking sector (Stefan Gebauer, Falk Mazelis; European Central Bank)

Monetary policy and its transmission in a globalised world (Michele Ca’ Zorzi, Luca Dedola, Georgios Georgiadis, Marek Jarociński, Livio Stracca, Georg Strasser; European Central Bank)

Negative rates and the transmission of monetary policy (Miguel Boucinha and Lorenzo Burlon; European Central Bank)

“The current crisis is a wake-up call” (Andrea Enria; European Central Bank)

Loan supply and bank capital: A micro-macro linkage (Thomas Kick, Swetlana Malinkovich, Christian Merkl; Deutsche Bundesbank)

Real Effects of Uncertainty: Evidence from Brexit (Anna Lipinska, Musa Orak; Federal Reserve Board of Governors)

Continue reading “News in Systemic Risk: Wednesday, May 13, 2020 (10 a.m. ET)”

US Businesses Navigate Multiple Government Support Programs

May 12, 2020

In response to the COVID-19 pandemic, the United States has adopted multiple programs providing support to businesses, specifically targeting job retention, while at the same time expanding unemployment insurance benefits and eligibility. Programs to support businesses vary across types of benefit and eligibility criteria. This post summarizes government support options available to businesses in the United States and some potential considerations for employers and employees.

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From the Assistant Dean for Admissions: A Unique Community Responds to COVID-19

By: Bruce DelMonico May 12, 2020

If there is one thing that has remained constant in my 15 years at Yale SOM, it’s the spirit of the student body. Graduates leave us each year at commencement and new students join us each year at orientation, but  the heart of the community remains unchanged. If you asked me for one word...

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News in Systemic Risk: Tuesday, May 12, 2020 (10 a.m. ET)

May 12, 2020

US dollar funding markets during the Covid-19 crisis - the international dimension (Egemen Eren, Andreas Schrimpf, Vladyslav Sushko; Bank of International Settlements)

US dollar funding markets during the Covid-19 crisis - the money market fund turmoil (Egemen Eren, Andreas Schrimpf, Vladyslav Sushko; Bank of International Settlements)

How Did China’s COVID-19 Shutdown Affect U.S. Supply Chains? (Sebastian Heise; Federal Reserve Bank of New York)

Cyclical systemic risk and downside risks to bank profitability (Jan Hannes Lang, Marco Forletta; European Central Bank)

Stressed banks? Evidence from the largest-ever supervisory review (Puriya Abbassi, Rajkamal Iyer, José-Luis Peydró, Paul E. Soto; Deutsche Bundesbank)

Bank resolution frameworks in systemic crises (Thorsten Beck, Deyan Radev, Isabel Schnabel; VoxEU)

A History of Risk-Based Premiums at the FDIC (Edward Garnett, LaVaughn Henry, Daniel Hoople, Ashley Mihalik; Federal Deposit Insurance Corporation)

COVID-19, volatility, and dark trading in financial markets (Gbenga Ibikunle, Khaladdin Rzayev; VoxEU)

The Mortgage Market Never Got Fixed After 2008. Now It’s Breaking Again. (Ben Eisen; Wall Street Journal)

Continue reading “News in Systemic Risk: Tuesday, May 12, 2020 (10 a.m. ET)”

2019-2020 Portfolio Performance Competition Winners Announced

By: Electra Ferriello May 11, 2020
Global Network Investment Competition

The six-month long portfolio performance portion of the Global Network Investment Competition concluded on April 30, 2020. The ICF is excited to announce team Alpha from Business School, Renmin University of China as the winner of the competition! Team Alpha’s portfolio consisted of stocks...

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Governments Support Businesses through Equity Investments

May 11, 2020

In response to the economic shutdown caused by COVID-19, many countries have announced plans to take equity stakes in private businesses. Germany and Poland have announced large-scale programs focused on relatively large companies that the government determines are systemically important. Other countries, like the U.S., have announced equity programs that target critical industries, which we cover in a separate survey. Several countries -- including the U.K., France, and Germany -- have also announced much smaller programs dedicating small sums to startups or small and medium-sized enterprises, as part of broader efforts to support small businesses. 

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News in Systemic Risk: Monday, May 11 2020 (10 a.m. ET)

May 11, 2020

Survey on the Access to Finance of Enterprises: Small businesses report challenging outlook for their access to external financing due to COVID-19 (European Central Bank)

The CCP-bank nexus in the time of Covid-19 (Wenqian Huang, Előd Takáts; Bank of International Settlements)

An ECB digital currency – a flight of fancy? (Yves Mersch; European Central Bank)

Global and domestic financial cycles: variations on a theme (Iñaki Aldasoro, Stefan Avdjiev, Claudio Borio, Piti Disyatat; Bank of International Settlements)

COVID-19 and the transmission of shocks through domestic supply chains (Fergal McCann, Samantha Myers; Central Bank of Ireland)

The Initial Labour Market Impact of COVID-19 (Stephen Byrne, Dermot Coates, Enda Keenan,Tara McIndoe-Calder ; Central Bank of Ireland)

The case for permanent stimulus (Paul Krugman; VoxEU)

How the Economy Will Look After the Coronavirus Pandemic (Joseph E. Stiglitz, Robert J. Shiller, Gita Gopinath, Carmen M. Reinhart, Adam S. Posen, Eswar Prasad, Adam Tooze, Laura D’andrea Tyson, Kishore Mahbubani; Foreign Policy)

Despite Recent Bets, Fed Isn’t Likely to Consider Negative Interest Rates (Nick Timiraos; Wall Street Journal)

Fed set to adopt ‘elements’ of price-level targeting (William Towning; Central Banking)

Continue reading “News in Systemic Risk: Monday, May 11 2020 (10 a.m. ET)”

News in Systemic Risk: Friday, May 8 2020 (10 a.m. ET)

May 8, 2020

The Money Market Mutual Fund Liquidity Facility (Marco Cipriani, Gabriele La Spada, Reed Orchinik, and Aaron Plesset; Federal Reserve Bank of New York)

The monetary policy response to the pandemic emergency (Phillip R. Lane; European Central Bank)

The COVID-19 Crisis and the Monetary Policy Response (Gabriel Makhlouf; Central Bank of Ireland)

On the instability of banking and other financial intermediation (Chao Gu, Cyril Monnet, Ed Nosal, Randall Wright; Bank for International Settlements)

Effects of Covid-19 on the banking sector: the market's assessment (Iñaki Aldasoro, Ingo Fender, Bryan Hardy, Nikola Tarashev; Bank of International Settlements)

Monetary Policy, Self-Fulfilling Expectations and the U.S. Business Cycle (Giovanni Nicolò; Federal Reserve Board of Governors)

Oceans Apart? China And Other Systemically Important Economies (Hongyi Chen, Pierre Siklos; Hong Kong Institute for Monetary and Financial Research)

Is Central Bank Currency Fundamental to the Monetary System? (Hanna Armelius, Carl Andreas Claussen, Scott Hendry; Bank of Canada)

Don’t do it again! The Swedish experience with negative central bank rates in 2015-2019 (Fredrik N G Andersson, Lars Jonung; VoxEU)

Fed Officials See Economy Avoiding Worst-Case Outcome Amid Crisis (Michael S. Derby; Wall Street Journal)

Continue reading “News in Systemic Risk: Friday, May 8 2020 (10 a.m. ET)”

16th Annual Behavioral Conference Goes Virtual

By: Electra Ferriello May 7, 2020
Student Organizers

Each spring, the Yale ICF hosts the Lynne & Andrew Redleaf Foundation Graduate Student Conference (formerly the Whitebox Advisors Graduate Student Conference). The conference is organized and run by Yale PhD students selected by a committee of Yale faculty members, including Professor Nicholas...

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U.S. Bank Regulators Modify Liquidity Regulation to Support Participation in Fed Programs

May 7, 2020

On May 5, U.S. bank regulators issued an interim final rule modifying the Liquidity Coverage Ratio (LCR) to support banks’ use of the Paycheck Protection Program Liquidity Facility (PPPLF) and Money Market Mutual Fund Liquidity Facility (MMLF). 

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Use of Federal Reserve Programs

May 7, 2020

The Federal Reserve recently announced a number of lending facilities, based on programs first implemented during the Global Financial Crisis of 2007-09. This post provides an update on the use of Fed lending programs since April 16. It also introduces the Fed’s newest lending facility, the Paycheck Protection Program Liquidity Facility (PPPLF); discusses international use of the Fed’s liquidity swap lines; and provides an overview of similar lending programs in Europe and the United Kingdom. Our previous post on the early use of Fed programs is available here

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News in Systemic Risk: Thursday, May 7 2020 (10 a.m. ET)

May 7, 2020

Banks' dividends in Covid-19 times (Jean-Philippe Svoronos, Rastko Vrbaski; Bank for International Settlements)

Where Have the Paycheck Protection Loans Gone So Far? (Haoyang Liu, Desi Volker; Federal Reserve Bank of New York)

Releasing bank buffers to cushion the crisis - a quantitative assessment (Ulf Lewrick, Christian Schmieder, Jhuvesh Sobrun, Előd Takáts; Bank of International Settlements)

An Aggregate View of Bank Lending Standards and Demand (David Glancy, Robert Kurtzman, Rebecca Zarutskie; Federal Reserve Board of Governors)

Heterogeneity in corporate debt structures and the transmission of monetary policy (Fédéric Holm-Hadulla, Claire Thürwächter; European Central Bank)

A regulatory and financial stability perspective on global stablecoins (Mitsutoshi Adachi, Matteo Cominetta, Christoph Kaufmann and Anton van der Kraaij; European Central Bank)

Regulation has strengthened the financial system’s resilience (Marja Nykänen; Bank of Finland)

Translating Weekly Jobless Claims into Monthly Net Job Losses (Jason Bram, Fatih Karahan; Federal Reserve Bank of New York)

Transcript: Chicago Fed President Charles Evans Speaks With Reporters (Wall Street Journal)

Continue reading “News in Systemic Risk: Thursday, May 7 2020 (10 a.m. ET)”

Multinational Organizations’ Efforts to Assist Countries through COVID-19 crisis

May 6, 2020

The International Monetary Fund (IMF), World Bank, and other multinational organizations have announced plans to make hundreds of billions of dollars available to emerging markets in response to the COVID-19 crisis. But their own experts have said these funds will probably be insufficient, and they have collectively released only a small fraction of that amount so far.

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News in Systemic Risk: Wednesday, May 6 2020 (10 a.m. ET)

May 6, 2020

The Cost of Bank Regulatory Capital (Matthew Plosser, Joao Santos; Hong Kong Institute for Monetary and Financial Research)

Bridge to Recovery: The Bank’s COVID-19 Pandemic Response (Carolyn A. Wilkins; Bank of Canada)

Creditor's Protection and Bank Loans: market power and bankruptcy reform's effects (Leonardo S. Alencar, Rodrigo Augusto Silva de Andrade e Klenio de Souza Barbosa; Bank of Brazil)

Quantitative easing and the price-liquidity trade-off (Marien Ferdinandusse, Maximilian Freier, Annukka Ristiniemi; European Central Bank)

Reviving the potency of monetary policy with recession insurance bonds (Julia Coronado, Simon Potter; Peterson Institute for International Economics)

U.S. Consumer Debt Payments and Credit Buffers on the Eve of COVID-19 (Andrew Haughwout, Donghoon Lee, Joelle Scally, Wilbert van der Klaauw; Federal Reserve Bank of New York)

The Fed's Response to Economic News Explains the "Fed Information Effect" (Michael D. Bauer, Eric T. Swanson; NBER)

Fed Embraces Libor Again and Risks Undermining Push to Kill It (William Shaw, Alex Harris; Bloomberg)

Continue reading “News in Systemic Risk: Wednesday, May 6 2020 (10 a.m. ET)”

“Dawn Blossoms Plucked at Dusk” (朝花夕拾)—My Life at Yale

By: Gen Li May 5, 2020
Gen Li

It seems like only yesterday that I came to the university I have grown to love deeply, Yale University. In the twinkling of an eye, I am reluctant but have to say goodbye to her. Two years ago, my parents were shocked and a bit displeased by my decision to give up the Ph.D. offer I had received...

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News in Systemic Risk: Tuesday, May 5 2020 (10 a.m. ET)

May 5, 2020

On Central Bank Independence (Paul Tucker; Finance & Development)

Financial stability assessment: Coronavirus pandemic demonstrates the necessity of risk buffers (Marja Nykänen; Bank of Finland)

How did COVID-19 disrupt the market for U.S. Treasury debt? (Jeffrey Cheng, David Wessel, Joshua Younger; Brookings Institution)

How Are Small Businesses Adjusting to COVID-19? Early Evidence From a Survey (Alexander Bartik, Marianne Bertrand, Zoë B. Cullen, Edward L. Glaeser, Michael Luca, Christopher Stanton; Harvard Business School)

The Path to Full Recovery (Tom Barkin; Federal Reserve Bank of Richmond)

Regulation, Technology and the Banking Sector (Amit Seru; Monetary Authority of Singapore)

Interbank risk assessment –A simulation approach (Maximilian Jager, Thomas Siemsen, Johannes Vilsmeier; Deutsche Bundesbank)

Connectedness of the Dutch Economy Leads to Lower GDP Growth Forecast (Alfredo Cuevas; International Monetary Fund)

Dealers' insurance, market structure, and liquidity (Francesca Carapella, Cyril Monnet; Bank for International Settlements)

Branching Networks and Geographic Contagion of Commodity Price Shocks (Teng Wang; Federal Reserve Board of Governors)

Information Management in Times of Crisis (Haelim Anderson, Adam Copeland; Federal Deposit Insurance Corporation)

ECB Faces Renewed Legal Pressure Over Bond Purchases (Tom Fairless; Wall Street Journal)

Continue reading “News in Systemic Risk: Tuesday, May 5 2020 (10 a.m. ET)”

ICF Executive Fellow, Andrea Levere, Shares Ideas for Building Equity by Investing Equity

By: Electra Ferriello May 5, 2020
Andrea Levere

Andrea Levere ’83, is President Emerita of Prosperity Now, a private nonprofit organization with the mission of ensuring that everyone can gain financial stability, build wealth and achieve prosperity. She is also an ICF Advisory Board member and current ICF Executive Fellow. Andrea...

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Federal Reserve Expands Eligibility for Municipal Liquidity Facility

May 4, 2020

On April 27, the Federal Reserve announced an expansion in scope and duration of the Municipal Liquidity Facility (MLF), a new facility established on April 9 to alleviate the funding needs of cities, counties, and states as municipalities fight the ongoing threat of COVID-19 across the United States and bond markets stall.

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News in Systemic Risk: Monday, May 4 2020 (10 a.m. ET)

May 4, 2020

What’s the Fed doing in response to the COVID-19 crisis? What more could it do? (Jeffrey Cheng, Dave Skidmore, David Wessel; Brookings Institution)

Public guarantees for bank lending in response to the Covid-19 pandemic (Patrizia Baudino; Bank for International Settlements)

Risk Appetite and Intermediation by Swap Dealers (Scott Mixon, Esen Onur; Commodity Futures Trading Commission)

 The Dilemma of International Diversification: Evidence from the European Sovereign Debt Crisis (Bill B. Francis, Iftekhar Hasan, Gergana L. Kostova, Sami Ben Naceur; Bank of Finland)

Liquidity Coverage Ratio in a Payments Network: Uncovering Contagion Paths (Richard Heuver, Ron Berndsen; De Nederlandsche Bank)

It Matters that Most COVID Layoffs in March were Furloughs (Erica Groshen; Cornell University)

Leveraged-Loan Investors Let Companies Take the Wheel ( Brian Chappatta; Bloomberg)

Continue reading “News in Systemic Risk: Monday, May 4 2020 (10 a.m. ET)”

News in Systemic Risk: Friday, May 1 2020 (10 a.m. ET)

May 1, 2020

ECB announces new pandemic emergency longer-term refinancing operations (European Central Bank)

Banks more restrictive on lending to new borrowers (Norges Bank)

Covid-19 and Economic Analysis: A Review of the Debate (G. Caracciolo, F. Cingano, V. Ercolani, G. Ferrero, F. Hasan, A. Papetti, P. Tommasino; Bank of Italy)

A Fiscal Capacity for the Euro Area: Lessons from Existing Fiscal-Federal Systems (Pablo Burriel, Panagiotis Chronis, Maximillian Frier, Sebastian Hauptmeier, Lukas Reiss, Dan Stegarescu, Stefan Van Parys; Bank of Spain)

The Missing Link: Monetary Policy and Labor Share (Cristiano Cantore, Filippo Ferroni, Miguel León-Ledesma; Bank of England)

Teachable Moments from the Pandemic (Stephen S. Poloz; Bank of Canada)

Alternative scenarios for the impact of the COVID-19 pandemic on economic activity in the euro area (Niccolò Battistini, Grigor Stoevsky; European Central Bank)

Economic policy incentives in the fight against pandemics (Roberto Chang, Andres Velasco; VoxEU)

The economic risk from COVID-19 is not where COVID-19 is (Ilan Noy, Nguyen Doan, Benno Ferrarini, Donghyun Park; VoxEU)

Continue reading “News in Systemic Risk: Friday, May 1 2020 (10 a.m. ET)”

Federal Reserve Announces Changes to Main Street Lending Program

May 1, 2020

On April 30, the Federal Reserve Board announced updates to the Main Street Lending Program, after receiving more than 2,200 comments from individuals, businesses, and nonprofits on the initial terms of the program announced on April 9. Major changes include creating a third facility that accepts riskier borrowers, lowering the minimum loan size, lowering the interest rate, and expanding the pool of eligible borrowers.

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First-Year Students Look Back at their Favorite On-Campus Events of the Year

May 1, 2020

While the current pandemic has meant that many of these events convened virtually this spring, the spirit of community persists for SOM students. And it was in that spirit that first-year student life chair Stephanie Wayne ’21 reached out to us recently, wanting to share her and her classmates’ reflections on their favorite events with admitted and prospective students. 

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Conventional Monetary Policy and the Zero-Lower-Bound

April 30, 2020

Central banks across the world have eased monetary policy to facilitate smooth market functioning during the Covid-19 crisis. Interest rate cuts are their primary policy tool. Global interest rates are now at historic lows, with 14 of the 38 central banks in a Bank for International Settlements (BIS) database setting their nominal key policy rates at or below 0.25 percent; three are below 0.

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Financial History Repeats Itself. The South Sea Bubble: 22 April 1720

By: Electra Ferriello April 30, 2020
22 April

This year, the ICF is looking back at the South Sea Bubble of 1720 which was the first global financial bubble that occurred 300 years ago in Paris, London and the Netherlands. On our South Sea Bubble 1720 project website, we share newspaper clippings from the Leydse Courant, a Dutch newspaper...

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FHFA Relaxes Standards for GSE Mortgage Servicers

April 29, 2020

On April 21, the Federal Housing Finance Agency (FHFA) announced that it was changing standards for mortgage servicers in an effort to reduce burdens brought on by drastic increases in mortgage nonpayment. Quickly following, on April 22, the FHFA announced that Fannie Mae and Freddie Mac would purchase some mortgages in forbearance due to COVID-19.

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IFC Provides $8 Billion in Fast-Track Financing to Private Sector

April 29, 2020

The International Finance Corporation (IFC) will be providing fast-track financing of $8 billion to support companies impacted by the COVID-19 pandemic. On March 3, the World Bank Group approved $6 billion in fast-track financing through the IFC. It approved an additional $2 billion on March 17.

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Easing Liquidity Regulations to Counter COVID-19

April 27, 2020

Many countries are easing liquidity regulations to help banks get cash to their customers and to prevent liquidity shortages from spreading across financial markets. Countries are addressing liquidity shortages using two main tools: the liquidity coverage ratio (LCR), which most developed countries implemented in recent years as part of the Basel III agreements, and the more traditional reserve requirement ratio.

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A Long Way to Go for Emerging Markets

April 27, 2020

The developing world will soon become the frontlines in the battle against the coronavirus, and markets are bracing for the resulting fallout. The Covid-19 crisis has already had an unprecedented effect on emerging markets—more than 100 of the IMF’s member countries have already asked for aid: Simultaneous health and financial crises add fuel to the linkages between sovereign debt crises, banking crises, and growth and competitiveness crises. In this note, we discuss financial markets’ responses in the first months of the current crisis, the unique challenges EMs face compared to wealthier nations, and reasons for cautious optimism at the present moment.

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Germany Provides Public Funding for Recapitalization and Startup Equity

April 27, 2020

On April 20, the United Kingdom (UK) announced a GBP 1.2 billion ($1.49 billion) support package for “innovative firms.” The government, in partnership with private investors in some instances, will deploy the money through a new program called the Future Fund and the expansion of an existing program called Innovate UK. 

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News in Systemic Risk: Friday, April 24, 2020 (10 a.m. ET)

April 24, 2020

WTO and IMF Joint Statement on Trade and the COVID-19 response (International Monetary Fund)

Buffering Covid-19 losses - the role of prudential policy (Mathias Drehmann, Marc Farag, Nikola Tarashev and Kostas Tsatsaronis; Bank of International Settlements)

Post-crisis international financial regulatory reforms: a primer (Claudio Borio, Marc Farag and Nikola Tarashev; Bank of International Settlements)

SME liquidity needs during the COVID-19 shock (Niall McGeever, John McQuinn, Samantha Myers; Central Bank of Ireland)

The coronavirus stimulus package: Quantifying the transfer multiplier (Christian Bayer, Benjamin Born, Ralph Luetticke, Gernot Müller ; VoxEU)

Globalization is in retreat for the first time since the Second World War (Douglas Irwin; Peterson Institute for International Economics)

Fed Focuses on Lending Programs, but Monetary Policy Deliberations Loom (Nick Timiraos; Wall Street Journal)

Continue reading “News in Systemic Risk: Friday, April 24, 2020 (10 a.m. ET)”

Dwayne Luquetta '20 Joins Chenmark Capital Management to Pursue SME Career Path

By: A. J. Wasserstein April 24, 2020
dl

Dwayne Luquetta, a 2020 MBA candidate of the Yale School of Management (SOM), is joining Portland, Maine-based Chenmark Capital Management as a senior executive. Chenmark is an operating investment vehicle focused on acquiring and building premier small and medium enterprises (SME) with an...

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Congress Expands Support to Small Businesses

April 24, 2020

On April 23, the U.S. Congress passed emergency legislation to appropriate an additional $310 billion for the Paycheck Protection Program (PPP), $50 billion for Economic Injury Disaster Loans (EIDL), and $10 billion for EIDL Emergency Advances. Congress created the PPP and EIDL Emergency Advance programs on March 27 in the CARES Act.

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Lessons Learned in Designing and Implementing Support for Small Businesses

April 24, 2020

One month into the biggest global bailout of small businesses in history, countries have started to adjust their initial programs to make them more effective. Small and medium sized enterprises (SMEs) account for 90 percent of businesses and a majority of employment opportunities across the world. Even during non-crisis times, many SMEs face constraints in accessing financing. Governments are working to provide exceptional support during the COVID-19 pandemic in order to prevent bankruptcies, unemployment, and a deeper recession.

Continue reading “Lessons Learned in Designing and Implementing Support for Small Businesses ”

US Begins Airline and Aviation Interventions

April 23, 2020

On April 20, the U.S. Treasury Department announced that it had finalized agreements with six major airlines—Allegiant Air, American Airlines, Delta Air Lines, Southwest Airlines, Spirit Airlines, and United Airlines—for $20.5 billion in assistance under the Payroll Support Program (PSP) established by the CARES Act. It said five other airlines plan to participate, which would bring participation to 95% of U.S. air carrier capacity.

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Aviation Interventions Continue Internationally

April 23, 2020

Governments around the world have committed many billions of dollars to help the aviation sector survive the COVID-19 crisis. This aid comes in the form of grants, loans, loan guarantees, tax relief, and other subsidies. Some programs are targeted at specific firms and others provide broad-based support. The US is implementing what it expects to be the largest targeted package for the industry. Singapore's program appears to be the second most generous. 

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News in Systemic Risk: Thursday, April 23, 2020 (10 a.m. ET)

April 23, 2020

ECB takes steps to mitigate impact of possible rating downgrades on collateral availability (European Central Bank)

Insurance regulatory measures in response to Covid-19 (Jeffery Yong; Bank of International Settlements)

Longer-Run Economic Consequences of Pandemics (Oscar Jorda, Sanjay R. Singh, Alan M. Taylor; Federal Reserve Bank of San Francisco)

The Janus face of bank geographic complexity (Iñaki Aldasoro, Bryan Hardy and Maximilian Jager; Bank of International Settlements)

Bank portfolio risk profiles vs the zero lower bound (Johannes Bubeck, Angela Maddaloni, José-Luis Peydró; VoxEU)

More Coronavirus Aid to Small Businesses Is Coming, But It Might Not Be Enough (Amara Omeokwe; Wall Street Journal)

Continue reading “News in Systemic Risk: Thursday, April 23, 2020 (10 a.m. ET)”

The IMF Expands and Expedites Lending in Response to the COVID-19 crisis

April 22, 2020

Since March, the International Monetary Fund (IMF) has expanded existing lending programs and introduced new ones to help countries bear the costs of the COVID-19 crisis. As of April 21, it had approved a total of $8.7 billion in emergency financing for over 40 member countries, of the more than 100 countries that have requested assistance. (See the updated list here).

Continue reading “The IMF Expands and Expedites Lending in Response to the COVID-19 crisis”

Early Use of Federal Reserve Programs

April 22, 2020

After the COVID-19 crisis began, the Federal Reserve quickly announced a number of emergency lending facilities, largely based on programs it first introduced during the Global Financial Crisis of 2007-09 (GFC). These programs have varied in size and speed of implementation. Bank reserve balances at the Fed have reached a historic high in recent weeks, exceeding $3 trillion for the first time, suggesting banks could lend much more.

This post discusses the early use of the following Fed lending programs: (1) primary credit through the discount window, (2) central bank swap lines and FIMA repos, (3) the Money Market Mutual Fund Liquidity Facility (MMLF), (4) the Primary Dealer Credit Facility (PDCF), and (5) the Commercial Paper Funding Facility (CPFF). 

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Governments Provide Financial Regulatory Relief

April 22, 2020

The COVID-19 crisis has led governments across the world to temporarily ease the operational burden of  supervisory and regulatory activities on the financial institutions they regulate. These regulatory relief efforts can be broken down into three major categories: 

  1. Reducing supervisory activities such as stress tests and bank examinations. 
  2. Delaying the implementation of new rules or laws. 
  3. Reducing reporting requirements.
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EarthDay50: Yale SOM Finance Faculty Write About Climate Finance

By: Electra Ferriello April 22, 2020
earth

Happy Earth Day! In honor of the 50th anniversary of Earth Day, we would like to share some of the recent research conducted by Yale SOM finance faculty about climate finance:   “Is the Risk of Sea Level Rise Capitalized in Residential Real Estate?” by Justin Murfin and Matthew...

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Fed Actions Help Agency mREITs Step Off the Liquidity Roller Coaster

April 22, 2020

Recent weeks have been a rollercoaster for mortgage real estate investment trusts (mREITs). Problems in funding markets led to quickly falling stock prices for mREITs through March, although they have stabilized in April. In this note, we discuss the business model of the roughly $700 billion mREIT industry, how that model has come under pressure during the COVID-19 crisis, and the differential effect of the Fed’s actions across the industry.

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News in Systemic Risk: Tuesday, April 21, 2020 (10 a.m. ET)

April 21, 2020

Identifying regions at risk with Google Trends: the impact of Covid-19 on US labour markets (Sebastian Doerr and Leonardo Gambacorta; Bank for International Settlements)

Monetary Policy Uncertainty and Monetary Policy Surprises (Michiel De Pooter, Giovanni Favara, Michele Modugno, and Jason Wu; Federal Reserve Board of Governors)

How COVID-19 will change the nation’s long-term economic trends (Mark Muro, Tracy Hadden Loh, Martha Ross, Jenny Schuetz, Annelies Goger, Nicole Bateman, William H. Frey, Joseph Parilla, Sifan Liu, and Adie Tomer; Brookings Institution)

Pandemic loans to firms: Postponing the evil day? (Patrick Honohan ; Peterson Institute for International Economics)

Fed’s balance sheet increases by 50% since March (William Towning; CentralBanking)

The Design Flaw At The Heart Of The CARES Act (Kathryn Judge; Forbes)

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Government Support to Individuals and Households During Crises

April 20, 2020

Many countries are adopting programs to provide support to individuals in response to the COVID-19 pandemic, which has entailed unprecedented government-directed curtailment of economic activity. These programs are designed to provide cashflow support for individuals and households who may be struggling due to economic uncertainty and hardship. Measures to support individuals vary and either enhance cashflows or decrease required expenses. In the former category, countries have adopted measures to provide enhanced income support to the unemployed, direct payments to individuals, and favorable access to retirement savings. Tax cuts and filing extensions are examples of the latter. 

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News in Systemic Risk: Monday, April 20, 2020 (10 a.m. ET)

April 20, 2020

The dynamics of non-performing loans during banking crises: a new database (Anil Ari, Sophia Chen, Lev Ratnovski; European Central Bank)

Social Distancing and Supply Disruptions in a Pandemic (Martin Bodenstein, Giancarlo Corsetti, and Luca Guerrieri; Federal Reserve Board of Governors)

The growth of non-bank finance and new monetary policy tools (Adrien d'Avernas, Quentin Vandeweyer, Matthieu Darracq Pariès; VoxEU)

The Great Lockdown: Worst Economic Downturn Since the Great Depression (Kristalina Georgieva; International Monetary Fund)

Expected loss provisioning under a global pandemic (Raihan Zamil; Bank for International Settlements)

Interview with Expresso (Luis de Guindos; European Central Bank)

Derby’s Take: Officials Weigh In on Moral Hazard Risk From Fed Interventions (Michael Derby; Wall Street Journal)

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News in Systemic Risk: Friday, April 17, 2020 (10 a.m. ET)

April 17, 2020

Macroeconomic effects of Covid-19: an early review ( Frederic Boissay and Phurichai Rungcharoenkitkul; Bank for International Settlements)

Treasury Market Liquidity during the COVID-19 Crisis (Michael Fleming and Francisco Ruela; Federal Reserve Bank of New York)

Governor’s Statement (Reserve Bank of India)

The art of central bank communication: Old and new (Yosuke Takeda, Masayuki Keida; VoxEU)

Central bank lending logistics in the war on COVID-19: A primer (Simon Potter; Peterson Institute for International Economics)

Tracking Labor Market Developments during the COVID-19 Pandemic: A Preliminary Assessment (Tomaz Cajner, Leland D. Crane, Ryan A. Decker, Adrian Hamins-Puertolas, Christopher Kurz; Federal Reserve Board of Governors)

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Italy Expands and Updates its Credit Guarantee Programs

April 17, 2020

Italy recently updated and expanded its credit guarantee program for businesses because the original was too small and too administratively complex to get funds to small businesses quickly. The Italian government, with permission from the European Commission (EC), solved the problems, in part, by: (1) significantly increasing the overall amount of funds available in the program and (2) introducing a completely new program explicitly for the self employed and companies with up to 499 employees.

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